♪ . >> clayton: everybody wang chung. sad moment on the show with our last few seconds here on the show. we have a little going away cake for long-time co-host, dave briggs. >> juliet: good luck, dave. >> clayton: good luck, dave. can you tell people where you're going now? >> dave: i am going to do sports in 2013. i will reveal that on thursday. i want to say thank you to you, ali always calls us her work husbands. you've been like my work brother on and off camera. thanks to all the viewers who thousands of thaws, it humbles me. i will miss you all. i will miss the show and miss the network. happy new year.

gregg: this is it. we are just hours away from falling off the so-called fiscal cliff. tax hikes for nearly every american. lots of different ones. spending cuts of totaling more than a trillion dollars. by all indications, nothing, we mean nothing has changed on capitol hill. senate majority leader harry reid saying significant distance remains between the two sides. good morning everyone, i'm gregg jarrett in for bill hemmer here in "america's newsroom.". >> i'm heather childers in for martha maccallum the senate gavels in at 11:00 a.m. we'll see if there was some miracle overnight. gregg: i doubt that. yesterday, republican senate leader mitch mcconnell made an emergency call to the vice president joe biden in an evident to jump-start negotiations. heather: if no deal is haed

out today, majority leader reid says he will call a vote on a separate white house plan that reflects's original proposal. gregg: chief correspondent mike emanuel kicks off the coverage. mike, where do the things stand in the fiscal cliff talks at this critical late-stage? >> reporter: gregg, there seems to be some hope that conversations between vice president joe biden and senator mitch mcconnell can produce a deal. aides say the two men spoke multiple times last night and will continue working toward a solution. mcconnell called the vice. president bush: after weighing 18 hours from senate majority leader harry reid who seemed to throw in the towel. >> there is still significant difference between two sides and negotiations continue. there is still time left to reach an agreement and we intend to continue negotiations. >> reporter: a big issue is what thresh do you continue

the bush tax cuts. the democrats latest proposal, extend expiring tax rates for individuals with taxable income up to $360,000. and couples with income of about $450,000. senate republicans latest proposal allah taxes to rise on $450,000 for individuals and 550,000 for couples. republican aides say the democrats in the senate have not made any additional offers since saturday afternoon. gregg: what is going on the house side of the capitol? >> reporter: the attitude they have been doing their work all year long. they have been passing multiple bills throughout the course of 2012 and they feel like it is now time for the senate to act. here is a sample of the house republican view. >> we'll see what the senate brings back. ball's in their court. they have had these bills for months. you know, harry reid needs

to take up the bills we've sent him. they have been on his desk somewhere between may and september. so if you had an employee that had urgent paperwork on the desk for that long, you didn't take it up you would probably fire them. >> reporter: all hope at this point seems to be conversations between vice president joe biden and senator mitch mcconnell who have a long history together in the united states senate will produce a deal. gregg? gregg: mike emanuel, live on capitol hill. mike, thanks very much. let's talk a look at the floor of the house of representatives because they're in session right now. that is earl bloom men our from oregon. we don't have at chamber. we don't know how much are actually there. sometimes it is only, you know, the guy who is talking. but, nevertheless as mike pointed out they have passed several different measures, one way back in may to

tackle ernestly the budget deficit and debt and then a more recent one that passes an extension of all the bush tax cuts. so the their position right now, at least speaker boehner's is, hey, it is time for the senate to act on some of our bills. we'll keep an eye what is happening there. heather: busy day for them. president obama taking his case to the american public. here is what he had to say about the situation playing out on capitol hill. >> what's been holding us back is the dysfunction here in washington and if, you know, people start to see that on january 1st this problem still hasn't been solved, that we haven't seen the deficit reduction we could have had, the republicans been willing to take the deal i gave them, if they say, that people's taxes have gone up, which means consumer spending is going to be depressed, obviously that will adverse reaction in the markets. heather: there is lot at stake for all americans. three big issues on the

financial front this morning as a matter of fact,. stu varney, host of "varney & company" on the fox business network joins us now. stu, no deal on capitol hill, not really doing their job but we're hearing they get a pay raise. >> that incredible to some people, but nonetheless before this past weekend, president obama quietly signed a executive order that gives a small pay raise to two million federal workers and a small pay raise to all 535 members of congress. they will get an extra $900 each in the forthcoming year starting march 27th. but they get a pay raise. so the people who could not come to an agreement on cutting spending will in fact be spending more on themselves using money which we do not have. heather: speaking of all that spending we are expected to hit the debt ceiling in just hours. another blow to the economy. >> that means that we are about to run out of money and we can not borrow anymore. treasury secretary tim geithner says, well, we'll

move some money around so we won't default on our obligations but nonetheless we are out of money. this means if a debt ceiling deal is not included any fiscal cliff deal, and it is not likely to be. gregg: then this debt mess continues for a few months. and we've still got to argue that out in congress between congress and the president. heather: geithner said last thursday, he called them, trort nary measures would have to be taken to borrow money. >> yep. heather: breaking news in europe on the big 75% tax rate that the french wanted to pass for the rich. >> the breaking news that a french court said a 75% tax rate on individuals is unfair. so it has been rejected. the court court says unless you apply it to households it is not fair to single out individuals. that means 75% tax at this moment is not in effect. the french government and francois hollande says, it won't make any difference.

we'll rewrite the law using new wording and we'll catch more people in the 75% tax rate net. heather: stuart varney, i know you have a lot of work to do today. it is a busy day financially. thank you. >> thank you. gregg: what will it mean if lawmakers fail to strike a deal? according to the tax policy center 90% of the americans would see a tax hike in 2013. 121 million people will be paying a whole lot more in payroll taxs. those are social security payroll taxs. families making between 40 and $65,000 a year will have to pay an extra two grand to the u.s. government. the more you make, boy, that number really accelerates. heather? heather: another devastating blow in the fiscal cliff crisis, this mess, will be to the military. $500 billion slashed from the pentagon budget that is raising serious concerns about our national security. chairman of the house armed

services committee, california congressman, bruce mckeown will weigh in on the impact these cuts will v that is live in our next hour. gregg: secretary of state hillary clinton now hospitalized after the discovery of a blood clot following a concussion earlier this month. that concussion apparently related and causing secretary clinton to postpone her testimony on the benghazi terror attack. doctors say the blood clot is very risky. >> blood clots are serious depending where they are. the leg is more common and simpler to treat. lungs are more life threaten, into the brain of course, very, very serious if it is in the brain because of stroke and potential memory and injury to the entire brain. gregg: david lee miller is live in new york city with the very latest. and, david, what do we know about the location of that blood clot? >> reporter: gregg, the authorities have not released that information. they have only disclosed she

is being treated for a clot. she fainted earlier this month and hit her head causing a discussion. the clot was discovered in a follow-up exam. the state department issued a statement. it said in part, and i quote, secretary clinton's doctors suffered a blood clot had been formed because of con caution she sustained several weeks ago. she is being treated and at new york presbyterian and can be monitored her condition over the next 48 hours. clinton hags not had any public appearances since she suffered the concussion. among the things she was forced to cancel. the congressional hearings on attacks in benghazi and she had to cancel a number of trips overseas. >> what is being said about the health risks here? >> reporter: as we just heard. doctors say these blood clots can be serious but the severity of the problem depends greatly on the clot's location. clots often form in the legs we are told you about the most risky clots are the ones in the lungs and the brains. if you have a blood clot in

a brain it can cause a stroke, a common form of treatment is a blood thinner to let the clot dissolve over time. secretary clinton said she wanted to step down for the president's second term. there is already speculation that she is planning a run for the white house but her health and the fallout from this concussion could be a factor in her future plans. we are closely monitoring her condition. gregg? gregg: we surely are. all right. we wish her well. david lee miller, thank you very much. heather? heather: we are just getting started to a very, very busy morning here on "america's newsroom.". ahead, winter weather turning deadly after another tour bus crash. gregg: caught on tape. the moment an airliner suddenly crashed into a busy highway with deadly results later this hour. heather: what could finally bring democrats and republicans together on a fiscal cliff deal if anything. we'll take a look as we await word from capitol hill. >> this is what will go up year? >> yes.

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responsibility. what's your policy?

heather: welcome back. a nationwide amber alert comes to an end after two missing boys from georgia are found and their father is arrested. benjamin cleary, he is there on the right, he is nine, and his brother henry is seven years old. investigators say their father, daniel cleary, abducted them after the boys visited him for christmas. police in austin, texas, described how they arrested the father this a hotel. >> upon their arrival they on searched a -- observed a subject that matched the description along with the two children. that suspect has been taken into custody and is currently in the county jail. heather: the boy's mother says she is looking forward to their return.

gregg? gregg: congressional leaders are on the floor right now talking about the fiscal cliff. this after senate majority leader harry reid said, yesterday, a significant distance remains in negotiations on resolving this. notwithstanding then about 48 hours of intense talks about spending and social security. >> i was really gratified to hear the republicans taking their demand for social security benefit cuts off the table. the truth is they should have never been on the table to begin with. there is still significant difference between the two sides but negotiations continue. >> i'm concerned about the lack of urgency here. we all know we're running out of time. this is far too much at stake for political gamesmanship. we need to protect the american families and businesses from this looming tax hike. everyone agrees that that action is necessary. gregg: steve hayes, is the

senior writer for "the weekly standard" and a fox news contributor. steve, great to see you. the deal being bandied about right now to raise taxes on higher earners actually doesn't appear to do anything to fix the problem, that is, all the new revenue from higher taxes would be used for more spending. as we understand about 850 billion in new revenue would be spent on eliminating the fiscal cliff automatic spending cuts and extending unemployment checks. is it true not a dial would go to cutting the real problem, the debt and deficit? >> yeah. in one scenario that is absolutely the case. we shouldn't actually be surprised. it has been clear at least for a short amount of time that this hasn't been the goal of these discussions. i mean for all the talk about deficit reduction and despite the fact that this began as an effort to rein in spending after the 2010 elections, it is clear democrats in the house and senate, i would argue the president, haven't been

serious about long-term spending cuts. gregg: maybe they're not serious, you know, they see a political benefit to literally going over the fiscal cliff? >> yeah. i think there's, obvious political incentive for the president to go over the fiscal cliff at this point. if you think where we will be in just two days, and you're the president of the united states looking back on this, taxes will have gone up, defense cuts his uniform military have warned against will begin to be implemented, you can see a scenario in which the president portrays himself as a hero. he comes in. he becomes the chief tax cutter. his leadership becomes leading tax cuts for the middle class. he goes to restore defense cuts. he is perfectly happy to see defense cuts but he can point to his uniform military leaders, to secretary of defense leon panetta, we need some cuts but they're warning against these cuts. let me restore some of these cuts and can position himself as a statesman, and

and statesman on two areas have been politically problematic for democrats going back decades, taxes and national security. gregg: yeah. even if you were to use, steve, all the new revenue for deficit reduction, it is actually so small, i think it would only pay for 3% of the deficit, which doesn't it underscore the need to stop the prove la bat spending which has actually gone up from 2.9 to 3.8 trillion in the last four years? that is a staggering rise of about 30%. >> a huge, a huge jump, and when you look at the kind of spending, not just that we need spending cuts it is the kind of spending reforms we need, and those reforms have to come to entitlements, medicare, medicare and social security, et cetera. because if we don't do that in a decade's time you will be talking about the u.s. government spending all of the revenue it takes in just to cover our entitlement programs. unless there's a a change in

the way our entitlement programs operate you will not change the trajectory of the debt in this country. you could confiscate the wealth, all of it the top 2% of americans and you're still not going to solve the fundamental long-term problem which is the way that our entitlement programs operate. >> the laffer curve, the great economist, would argue, diminishing returns, probably fed in at around 30 3% tax rate. the president and congress have known for a year and a half these tax hikes and spending cuts will happen tomorrow. is it no wonder, steve, the public's perception of politicians in washington abysmal? >> this was irresponsible from the beginning. it is irresponsible today. it was irresponsible through the election. i think republicans thought that mitt romney could win and they would approach the fiscal cliff differently. democrats obviously hoped the president would win and they could do this at the last minute this is the way washington has operated now but the biggest problem

isn't the lack of compromise it isn't the fact that they're doing this at the last minute. that we're still not serious about reforming spending and these entitlement programs. gregg: especially the entitlements. steve hayes, thanks very much. >> thanks, gregg. heather: coming up, big news to report about a celeb couple. i know gregg is waiting for this one. gregg: i'm so cynical about this. heather: kim kardashian and rapper con quite west -- can west getting ready for patter of little feet. gregg: 2012 with minutes taking away before we ring in the new year. thousands packing times square in new york city gearing up for a big party there. ♪ @

♪ sing polly wolly doodle all the day ♪ ♪ hah @

gregg: the house of representatives is in session right now. they're debating the so-called fiscal cliff but to our knowledge there is no vote pending. speaker boehner's position, we already passed one measure. it is now up to the u.s. senate. here's congressman ted poe just moments ago. take a listen to this. >> mr. speaker, the american people, they actually do get it, at least those people that work and pay taxes, the backbone of america, the workers of america. they say, stop the spending obsession. mr. speaker, the problem is spending. we got here by spending too much, not by taxing too little. we're going off the cliff of our pocket's full of somebody else's money and

that is just the way it is. gregg: we'll continue to monitor the remarks on the floor of the house of representatives and we're keeping an eye on what is going on over on the other side of the u.s. senate. not much activity. they're supposed to remeet or convene. it is a little difficult to know which at 11:00 a.m. this morning. so we'll keep you posted on that. heather: meantime a holiday horror story. nine people are killed in a tour bus accident. this happened in oregon. the bus, carrying about 40 people, lost control on an icy road yesterday. first-responders say it is one of the worst crashes they have ever seen. >> 20 years and, this is the first time i've ever seen anything like this. >> reporter: lieutenant brost was one of the first-responders. he helped treat dozens of injured passengers after their tour bus careened off interstate 84 this morning. >> it appeared most of the patients were ejebbed from

the bus as the bus went down the cliff. >> reporter: the bus finally claim to a stop at the bottom of the ravine. the roof was nearly ripped off. firefighters say there were about 40 people on board when it crashed on a steep mountain pacifist teen miles east of pendleton. >> this was in an area there was only 100 foot area of steepen bankment. they were pretty unfortunate crashing where they did. >> reporter: rescuers used ropes pulling dozens of injured survivors back up the steep slope. paramedics rushed 26 passengers to the hospital in pendleton. four were airlifted to osu in portland. the bus driver survived the crash but they haven't been able to talk to them. the bus was returning to van cue very, brit tish columbia, from las vegas, nevada. the bus company when reached by phone the owners had no

comment. survivors are being put up in a local hotel. heather: that cast ktp reporter, kai porter, reporting for us. gregg: investigators are now examining the black boxes after five people were killed in a plane crash. what they have found so far. heather: plus a bombshell new report on the benghazi attack placing blame on a key obama administration department. for-star general jack keane joins us. >> if you looked at the intelligence you would have substantially beefed up the security at that particular mission in benghazi. it didn't happen sufficiently. we lost four people, a bright ambassador.

gregg: a live look at the house floor. lawmakers are talking about the big issue of the day, the fiscal cliff that could impact about 90% of american households but the house is not able to act until the senate works something out right now. well, it appears the chances of that could be slim. just don't know, hard to tell, but we're trying to find out. maybe at 11:00 a.m. when the senate gets back together. if they can't working is out by midnight, taxes are going up beg-time. we'll also keep a close eye on the situation. by the way, matt mccall will join us coming and you he will break down all the difficult taxes and how it affects your wallet. so stay tuned for that.

heather: well a scathing new report blaming the state department for failing to respond to security threats at the u.s. consulate in libya. now the report by the senate homeland security committee says that the consulate became increasingly unstable in the months leading up to the terror attack. retired four-star general jack keane is a former vice chief of staff of the army and a fox news military analyst. thank you so much for joining us. >> glad to be here, heather. heather: i want to begin with something undersecretary for management patrick kennedy noted for a briefing on the committee. benghazi was flashing red around the time of the attack. that is what this report is called, flashing red. despite the increasing threat in the region and the apparent vulnerability of the compound no one seemingly recommended closing the facility or even shutting it down temporarily and this report says that was quote a grievous mistake. do you agree? >> yeah, absolutely. we could have written this

report given what we knew about it since the attack. the fact of the matter is senator lieberman's and senator snowe's committee were highly critical of the department of state, dod and the white house. department of state. they we'll indict the department of state for being shockingly irresponsible to protect american citizens at benghazi. that in view, heather, what you just said. they knew for months there was an ever increasing threat. there was a clear, present danger to benghazi and given the fact that the security forces, the local libyan security forces were ineffective and could not secure it, they either should have closed it down as you just pointed out or provided adequate security. >> you mentioned what they knew. it wasn't just what they knew, what we all knew, publicly reported incidents included in this time frame included this report as well. first on may 22nded the red cross building hit by two rpg round. no casualties.

june 6. the u.s. temporary mission facility in benghazi was targeted by an ied attack. blew a hole in the perimeter of the wall. june 11th, an attack carrieded out in benghazi on the ambassador to libya. followed by small-arms fire. finally on june 18th, the tunisian consulate in benghazi was stormed. even with all of that, and attacks not known publicly we did nothing, claiming initially not to have specific intelligence of an imminent attack. we also heard this phrase, lack of actionable intelligence. but this report goes on to say the absence of specific intelligence about an imminent attack should not have prevented the department of state from taking more effective steps. what steps should they have taken? >> well, listen, we know how to do this, heather. where we are, where we have embassies and we do not have effective local security forces. we did that in kabul,

afghanistan, in 2001 and we're still doing it today in 2012. we have done it in baghdad since 2003 and we're still doing it today. we know how to secure the diplomatic posts when local security forces are not effective. listen thooshs these terrorists. who walked in there, though did not fight their way in there. it is appalling. they just walked in. there were no security guards. a there was no quick reaction force. there was inadequate barriers. there were no towers to give you oversight of the area. there were unarmed people, libyan militia, controlling gate access. and that is it and a half a dozen or so other people who had side arms inside the consulate. heather: the thing is, it was widely understood that the libyan government could not adequately protect u.s. personnel. prior, in fact to ambassador stevens's visit to benghazi

in september of 2012, the u.s. mission in benghazi had made a request to the libyan ministry of foreign affairs for additional security in benghazi. the only libyan government response reportedly appears to have been a police vehicle parked in front of that gate that you mentioned, which sped away as the attack on september 11th happened. so the security department did nothing to fill that security gap. why? >> well, they should have, if they didn't want to provide the security forces because of some bureaucratic reason like not enough resources, not enough money, then clearly they should have shut this diplomatic post down. as the report said, it is shockingly irresponsible for them not to have protected those americans. and that is the seriousness of this entire thing. it is the policy in libya is also at fault because we were disengaging from the libyans as opposed to investing in them and helping them build an adequate security force and

that also contributed but the main contribution here is just irresponsibility. heather: well, finally, i want to touch on what the report kind of wraps up with which is the white house's response and it says, and this is a quote from the report. although this september 11th, 2012, attack in benghazi was recognized as a terrorist attack by the intelligence community and personnel at the department of state from the beginning, administration officials were inconsistent in stating publicly that the deaths in benghazi were the result of a terrorist attack. in fact we now know two e-mails from the state department, diplomatic security operations center on the day of the attack and the day after characterized the attack as first an initial terrorism incident and then as a terrorist event. the recommendations found here and i think it says it pretty well, when terrorists attack our country either at home or abroad administration officials should speak clearly and consistently about what has happened. so why did the obama

administration go to such great lengths repeatedly to not call it what it was? >> well i find that inexplicable. the fact of the matter is the operational reporting that came out of the consulate through the embassy, and to the, to the state department's crisis action and also to the white house situation room revealed initially, what had taken place and within 24 hours the cia had reported, through classified channels, who actually did the attack. so everybody in the national security community within 24 hours knew this was a terrorist attack and knew who did it. now these controversial talking points did not identify who did it because they did not want to flag to them that they were aware of it so they could get after them. but the fact of the matter is key officials, leaders in the national security community, within our government, absolutely knew first-hand that what had taken place. heather: all right.

general jack keane, thank you so much for your insight. we really appreciate it. >> happy new year, heather. heather: happy new year to you too. gregg: parts of the midwest preparing for another storm heading their way. our meteorologist maria molina is live at the fox extreme weather center following this one closely. hi, maria. >> gregg, good to see you. that's right, we're talking about another storm system that will impact the portions of the midwest with more accumulating zone on new year's eve and during the midnight hour. we're looking snow falling in areas like missouri. keep that in mind as you head how the doors later today and start to do preparations for new year's eve. we have snow coming down in portions of missouri and kansas. accumulations could be three to five inches of snow snow. i want to point out we have areas accumulated here on the satellite picture. this is kentucky with freezing rain that is dangerous stuff as far as any driving goes on the

roadways. you could be looking at slippery conditions on the road even on sidewalks if it happens to accumulate in your area. further off towards the west and the south, parts of oklahoma, texas as well, dealing with areas of rainfall. it could be coming down quite heavily at times especially later on tonight during the mid-flight hour. it will be impacting portions of western tennessee in that shading and yellow. it is heavier rain. northern mississippi, heads up. you will need umbrellas as you head across northern portions indiana. as we head northbound across upper portions of midwest it will be very cold but it will be dry so bundle up. out west, generally dry conditions. california up through the pacific northwest which is actually good news because it has been on the cool side. high temperatures in the afternoon, new york city, 36 degrees. parts of the midwest, 12 will be the temperature in minneapolis. as you head farther up north, talking single digits. 9 in minneapolis and in new

york city, 30. but, gregg, factor in the wind it feels even colder. 21. gregg: that friesing rain and ice, the black ice. 4:00 hour this morning i almost took a major header on that. you can't see it in the dark. the obviously dark at 4:00 a.m. it was just brutal. you will be part of the new year's special tonight? >> i am so excited. i will need to bundle up. it is very cold out there, especially more than 20 stories above the building i have to say. heather: maria was out there all morning before the sun came up, at the top of the ball is. gregg: really? be careful. the don't want you to take a header. thanks very much, maria molina. we look forward to seeing you tonight. >> thanks, gregg. heather: gregg, actually 2013 already on in part of the globe. it is party time down under. sydney, australia, look at that. ringing in the new year with a dazzling display of fireworks, lighting up the skies over the harbor there.

over to new zealand, 2012 already in the books. the celebrations kicking off with a big show of fireworks as well. i like those. gregg: yeah. heather: branch out. gregg: summertime in down under. heather: i don't know, is it? back at home, celebrations -- preparations underway for the celebration tonight as marie yaw talked about in times square. workers testing the big ball that will drop during the countdown to the new year. the ball more than 32,000 lights, covered by nearly 3,000 waterford crystals. gregg: when they practice the drop, what if something goes wrong and comes crashing to the ground? heather: don't say that. gregg: what do they do tonight? heather: they will blame you for that. >> replay last year's ball drop. heather: it is different every year. gregg: is it? heather: yeah. gregg: everybody will be so intoxicated they won't know. heather: some of the crystals here have dick clark's name etched into it. gregg: that will be a nice

gesture. he will be missed. have plans for new year's. hope they include fox news's all american new year's eve beginning at 11:00 p.m. eastern time. megyn kelly and bill hemmer will bring you the big event from times square along with greg gutfeld. i love greg. heather: will have a little more than a sweater on. gregg: kimberly guilfoyle. you can be part of the show, you can, texting us your happy new year's message. type the letter utext, all one word, then leave a space, then type a brief message and send it to 36288. utext, space, your message, to 36288. and then, you know, watch for your message tonight with megyn and bill. we might have it on the air. heather: you're so excited. i can't wait to sigh your message. gregg: i'm not allowed to because i work. heather: you can't? gregg: i don't think i'm allowed. that wouldn't be fair. heather: otherwise you would? gregg: of course. unbelievable videotape to

show you. a plane crashing on a busy highway in one of the world's big cities. the videotape, the details next. heather: plus, the house just recessing until the top of the hour. gregg: oh really? heather: they just started. 9:00 they started. they need a break. they recess at 10:00 where south carolina congressman tim green just finished speaking. as a matter of fact we're following all the developments for you so stay right here. >> hats off to the president. he stood his ground. he will get tax rate increases. maybe not at 250 but at upper income americans. the sad news for the country we've accomplished very little in terms of not becoming greece or getting out of debt. this deal won't affect the debt situation

heather: welcome back. investigators are examining the black boxes in the deadly plane crash in russia. amateur video capturing it on tape. now we're learning at least five people died and three others were badly hurt. the plane took off from an airport near moskow. it landed on a highway before breaking pieces and catching on fire. gregg: new videotape shoug house majority leader eric cantor arriving at capitol hill. he really didn't say much of anything. he was asked what's going on, is there a deal? he basically said, happy new year, happy new year, happy new year three times. and the senate is not convening until about 11:00

a.m.. it may not be officially reconvening but just meeting. that was the time that harry reid said it would happen. tony sayegh, former press aide to gop vice-presidential nominee jack kemp and national political correspondent for talk radio news service. kirsten powers, columnist for "the daily beast" and fox news contributor. questions ten, you said the president will come out getting most he what he wants. how do you figure that? >> well the main thing that the president wanted and what he really ran on during the entire campaign was raising taxes on people who make over $250,000. it's possible that threshold could move a little bit. the president put about the a week or two ago 400,000 threshold on the table. sew we could see something that goes up to 400 or 500,000. ultimately he will end up getting tax increases that he wants on people, upper income people. and, really have, given very

little up. i mean i don't think that there's, you know, that the cuts in spending. he really where he wanted to be. there is nothing being done on sequestration. at least the way it has been reported so far, which means the defense cuts will go into effect. though they will probably do something retroactive to offset some effects of that. overall hard to see where the president really didn't come out on top on this. gregg: and, tony, does that mean republicans sort of come out on the losing end? >> certainly with the politics this one, gregg, without a doubt. the president came into this whole fight with maximum leverage. he just won the election and frankly i don't think he wanted to go over the fiscal cliff but int seem he was so afraid of going over the fiscal cliff if that was the ultimate conclusion if he were not to get the rate increases that he was looking for. of course he negotiated a bit on the threshold but remember something about the actual threshold. chuck schumer and nancy pelosi, this summer suggest

ad million dollars be the mark for which people begin to pay higher tax rates, not 2 a $50,000. so i think the president definitely stretched his definition of millionaires and billionaires by putting 250 rate income level as that rate but he is getting extension of unemployment benefits he wants as well. so he certainly outmaneuvered us on this one but the real irony here that this whole process was born out of deficit reduction. now the reports are it might add to the deficit. that is counter intuitive. gregg: or at least the 800 plus billion in new revenue would be wiped out by $800 billion into l new spending. it is dead-even and not a nickel goes to deficit reduction. kirsten, if that happens, won't the american people say, hey, wait a minute, wasn't this whole thing supposed to be about reducing the deficit? >> no, they won't. this is fundamental fun

political point the republicans seem incapable of understanding. for all their claims this is what the country is obsessed with this is not what the country is obsessed with. gregg: what are they obsessed it. >> if you ask what major concerns last election it is economy and unemployment. if you ask a question do we have a problem with the debt and deficit they say that that is not the thing thatimate. more than anything that animates them, they don't want their benefits cut. i'm not saying that is right. i'm not saying that substantively right. i'm not saying that is good for the country. as a political issue there is reason the republicans have not been very specific about the cuts they want. gregg: tony, she make as pretty good point, it is a huge political win for democrats and the president and may be a fiscal failure but americans aren't obsessed with that as many republicans are. >> that is actually very true. it bears that in polling unfortunately but also because i will say republicans have failed to make this fiscal cliff

conversation enough about spending by addressing the revenue issue earlier and getting it off the table so they could focus on making the same point, that the bipartisan debt commission made itself, the majority of the problem with our debt and deficit is driven highly by entitlements that are out of control that need to be restructured and out of control spending in washington. they put it for $4 in spending cuts to $1 this revenue you could balance this budget and i certainly hope that is the conversation we begin to have during the debt crisis negotiations. gregg: this is how exciting i am. i reread, especially the erskin bowles portion of it and three to one. i won't bicker. >> slightly more than three. i'm averaging up, you're averaging down. gregg: i'll quote him if you want. >> be my guest. gregg: thanks, guys. heather: we have potential breaking news on deal front, republican u.s. senator jon kyl, quote, a lot of progress on fiscal cliff talks as those discussions ays w. see the seam? ays w.

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♪ . gregg: you know, our production team is so fantastic. they come up with such great music. how appropriate, big baby news for kim kardashian and rapper kanye west. the two now expecting their first child. west announced the news during a concert last night. calling it most amazing thing. the couple went public with their relationship back in march. you may recall that kim kardashian married nba player kris humphries in august of 2010. their divorce has yet to be finalized. you know the rest of that story. heather: then there is that. france's socialist government promising to keep fighting for higher taxes on the rich after its controversial 75% super tax was ruled unconstitutional.

greg palkot is live for us in london with these details. hi, greg. >> reporter: hey, heather. you think the wrangle over higher taxes in the states is serious check out what is happening in france. just over the weekend the french constitutional court said a planned 75% tax on those earning the equivalent of $1.3 million or more a year should be thrown out as unfair. it had already been blasted by government critics as anti-entrepreneur and anti-business. one skeptic branding it as fiscal bludgeoning. the government trying to balance the budget on the backs of the rich. it sparked a anecdotal rush of high rollers from the french exits including a well-known actor gerard depardieu who will move next door to belgium. french president hollande is not really defeated. court through a tax out more on a technicality.

the government is planning to issue a reworded tax bill soon and there are other tax hike that is the court did not cut. regardless the french stock market seemed to like the message over the weekend in a shortened trading session today, it bucked a trend europe-wide and was you have a percentage point. back to you, heather. >> thank you very much, greg palkot reporting live for us. thank you. gregg: potential lawsuit over the tragic shooting at sandy hook elementary school not from a victim's family. a survivor actually but could also be called a victim here. they claimed the state is at fault for failing to provide a safe setting. was it foreseeable? do they have a case? our legal panel debates it fair and balanced next hour. >> the white house is prepared to step in today if congress can't get something together to deal with the fiscal cliff deadline just 14 hours away from now. an update from 1600 pennsylvania avenue moments

away. >> well, it will be somewhere between 8,000 to $12,000. so i'm not looking forward to that. >> is that more than you expected to go up january 1st. >> even a dollar's more than i can afford, yes. so not good news

heather: thousands of first-responders are joining friends and family paying tribute to a hero firefighter gunned down in

the line of duty. you're looking live at the scene. this is in webster, new york, where the funeral of getting underway. the 19-year-old volunteer was one of two firefighters shot and killed on christmas eve while responding to a fire set by gunman, william spengler. we well have much more on this coming up. we have potential breaking news. potential movement on the senate on the budget battle. brand new hour of america's news headquarters. i'm heather childers in for martha maccallum. gregg: i'm gregg jarrett in for bill hemmer. the number two in the republican senate saying there could potentially be a bill ready for the floor. heather: there could be. mike emanuel live on capitol hill to see if this is happening or not. mike? >> reporter: very having trelments -- interesting

developments, gregg and heather. jon kyl, who told our john brandt, our senate producer there are signs of progress and he is hopeful something will be able to come to the floor. moments ago we had senator mitch mcconnell, the to be senate republican walk in. he had spoken to the vice president last night after midnight. spoke to him again this morning at 6:30 in the morning. by those measures it certainly seems like there is a good pace, if you will, to discussions between the two key figures to the negotiations at this critical stage. bottom line, talks are ongoing. a lot of official channels have been pretty quiet about signs of progress but senator kyl in a candid moment he does hear there is progress. and they are hopeful, hopeful, we will get a deal at some point and perhaps bring it to the floor. heather? heather: mike, i want to ask you in terms of all the time changes, do they still look to reconvene at 11:00? is that the latest you've heard?

>> reporter: that is the latest we are hearing. they will be back on the floor at 11:00 a.m.. we should get some comments at that point from the relevant senate leaders, mcconnell and reid. but we'll see, we'll listen carefully for any signs of announcement at their point or whether they are going to go into respective caucuses to perhaps run the status of negotiations. the latest numbers by their members. because of course before they say they have to the a deal they have to run it by all the respective senators here is where things stand. what do you think, essentially to brief them where things stand at that point. first things first. talks continue. late last night between the vice president and the senate republican leader. 6:30 this morning. and so a lot going on and we will see if it produces a deal. heather: the whisperer i think someone referred to him as the other day, vice president biden. thanks so much. we appreciate it. >> reporter: thank you. gregg: the mcconnell whisperer they call him around the

white house. last minute meetings were called, vacations cut short but as we listen to some of our nation's top politicians try to explain when a deal is not in place, seems like they can't agree on the reason nothing is getting done. >> we're willing to work with whoever can help. there is no single issue that remains an impossible sticking point. the sticking point appears to be a willingness, an interest, or frankly the courage to close the deal. >> so far at least congress has not been able to get this stuff done, not because democrats in congress don't want to go ahead and cooperate, i think it has been very hard for speaker boehner and republican leader mcconnell to accept the fact that taxes on the wealthiest americans should go up a little bit as part of an overall deficit reduction package. gregg: wendell goler is live at the white house. wendell, what are you hearing there? >> reporter: will as we heard, gregg, from my buddy

mike emanuel, we want to hear from vice president biden or senate minority leader mitch mcconnell. they essentially took the lead in these talks whether the president and speaker john boehner couldn't cut a deal. mccan nell says he wants to reach agreement. and california senator dianne feinstein says failure is not an option. >> the danger to our people, to our military, to our nation's security. to our economic base is just too great not to have a solution. so, you know, what makes this government work is compromise. when you don't compromise there is stasis. we have had enough of that for too long. >> reporter: the president says if biden and mcconnell can't cut a deal the senate will vote on extending tax cuts for families making less than $250,000 a year and basically force republicans to go the politically risky route voting against it, gregg. gregg: essentially that means taxes are definitely going to go up? >> reporter: it seems the

only question is the income cuttoff. now vice president biden is said to be about 100,000 a year apart. biden is willing to preserve tax cuts for families making up to $450,000. mcconnell holding out for $550,000. a year. south carolina senator lindsey graham is not happy about it. >> in 2010 we extend the all the tax cuts because the economy was weak. in 2012, 2013, we're not going to extend the tax cuts the economy is weaker. i don't understand the economics but i do understand the politics. the president won. the president campaigned on raising rates. he will get a rate increase. >> reporter: we focus on the tax rates but that is not the only issue. the bigger issue is what the money is used for. the republicans want to use it to reduce the deficit. the democrats want to ease spending cuts for another year or so. gregg? gregg: wendell goler, thank you very much, live at the white house. we switch to the other end of the avenue and there is house speaker john boehner

just arriving and, let's listen. >> [inaudible]. gregg: wow, we got a ephappy new year out of eric cantor. maybe i couldn't hear and maybe the speaker said something. we couldn't make it out. we'll try to find out from mike emanuel there at the capitol. heather: very big place. very tall ceiling. gregg: very cavernous. the audio is awful. heather: cavernous, that is good word for it. let's look how much money the fiscal cliff tax hikes could cost your family. this is it. if your annual income between 20 and $30,000 your tax bill could go up $1200 next year. that jumps to more than 1700 for those making 40 and 50,000. the fiscal cliff will cost those making 75 and 100 grand more than $3500. and while those making

between 200 and 500,000 will be paying about $14,000 more. if you make more than $500,000, a year, get ready to pay roughly an extra $35,000. if you make over one million, your tax increase will be near $216,000. gregg: lots of numbers, lots of digits there. wow!. wow! so how much progress is being made to avoid all of what you just saw? we'll ask california congressman buck mckeown when he joins us live a bit later on in the hour. heather: and as i mentioned at the t the show, thousands of first-responders they're gathering in webster, new york, right now to pay tribute to tomascz kaczowka. sorry, tomascz kaczowka. funeral services are just getting underway. the 19-year-old volunteer firefighter shot and killed while responding to a christmas eve fire that

turned out to be an ambush. police say that gunman william spengler set the fire and then shot and killed him along with his fellow firefighter and mentor mike kiapirini. thousands gathered to say good-bye to him. those that knew him best tried to put it into words. >> we all lost two loved ones this week in mike and tomascz. as part of the west webster fire department's extended family the members will always be there for each of you. mike was a loving husband, father and son, brother, friend, and he was my mentor. >> lieutenant lieutenant mike mike chiapperini, car 941, your

10-7. your work is done here. rest in peace, my friend. god bless the family, god bless, webster. and god bless the united state of america. >> he was a wonderful husband, loving devoted, my best french and even though i'm surrounded by wonderful people, i have an incredibly lonely feeling. my heart is broken but i'm so thankful for the years we did share. my life is richer because of him. i'm thankful for the three beautiful children he left us with. and a. heather: like tomascz kaczowka, he joined the fire department as teenager and

helped many new firefighters get their start. gregg: the on joy to -- envoy to syria is giving a stark warning on the crisis in that country. speaking in cairo he said syria could become another somalia if a solution there is not found and found soon. new violence is reported from aleppo to the north and dara to the south. leland vittert is reporting from our jerusalem bureau. leland? >> reporter: no solution on the horizon the violence inside syria is getting considerably worse. we're moving from what was an insurgency civil war to something almost a conventional civil war in its form of two sides moving against each other. the rebel frnt lines are starting to close in especially on damascus there and president assad's power base. we're being told that the rebel firing has actually closed the air board in

damascus. the rebels gained some strategic high ground so they can fire down into some of assad's strongholds into damascus. it may be now or never for president assad to husband his heavy tanks and artillery and air power to hit rebel positions to push them back or if the rebels will march all the way there intoward his power base. right now, recent reports over weekend added hundreds if not a thousand people to the death toll that is now over 45,000. the other thing we're seeing on a larger scale there inside of syria is the influence of foreign fighters and islamist who have come in. these are hardcore islamists who are much more interested turning syria into something like an islamic state or taking control of their chemical weapons stockpiles, their heavy weapons stockpiles than they are bringing democratic syria into fruition the next several months. that is the real concern for the international community.

gregg. >> leland vittert reporting live from jerusalem. thank you. >> the house just back in session as senator jon kyl says there may be progress on the senate side. the latest on the budget battle on capitol hill. gregg: and the price of milk, will it go over the cliff? we'll he will an update for you. a concussion delayed the secretary of state's testimony on benghazi. that minor health care taking a serious turn as hillary clinton is spending new year's eve in the hospital. >> blood clots are very common post-concussion. individuals with high stress that fly a lot, have immobility, sometimes weight is factor because it raise blood pressure and post-menopausal women can be most at risk for blood clots. are you flo? yes. is this the thing you gave my husband? well, yeah, yes. the "name your price" tool.

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gregg: just got some video

of a arrive als at the capitol. the majority leader mitch mcconnell and minority leader, harry reid reid. the majority leader. here is what we heard off-camara. apparently mcconnell said he spoke with vice president joe biden at 6:30 a.m. this morning. at 12:45 last night, which is technically a.m. asked if he was going to talk with him again? he said we'll get back. he was mum on whether he had spoken to senator harry reid. if something will be on the floor today and his optimism level, really just not talking about that so far. so we'll wait and see. heather: secretary of state hillary clinton's recent health problems taking a turn for the worst. secretary clinton is currently in a new york hospital today undergoing treatment for a blood clot. the condition stemming from a concussion that she sustained earlier this month

and joining us now, the chief of division of robotics at mt. sinai hospital and a fox news medical a-teamer. thanks so much for joining us. >> sure, heather. heather: what i said in the introduction is just about all we know because a lot of information is not being released about this. can you fill in the blanks for us? where could or would this blood clot possibly be located? >> well it's a pleasure. first of all let me just say i have not been in touch with her doctors and as you mentioned there is not a lot of information coming out but the blood clots we usually talk about mostly in the lower extremes. this is deep vain news thrombosis. this could be because she travels a lot, immobility and not moving a lot, certainly increases risk of blood clot. dehydration is major factor. what we know she was having some stomach virus. she gets dehydrated. basically falls and get as concussion. in the process of examining

her later on they found out she has this blood clot. this could be completely indrethsed not related to the blood clot. this is great we know about this because if the blood clot is not treated well with anti-coagulation, and not dissolved quickly it can travel to the lungs and that is deadly and devastating result. heather: they said that is what she is treated with right now? >> a columbia-presbyterian, that's true. heather: where a blood clot is located can also determine how severe it is, correct. >> that is very true. one. other risk factors as result of blood clot, she fell, had trauma to the hip. that is another thing that can cause. there could be blood clot in the vessels up in her brain one of veins. after trauma and concussion you could have blood clot up there. typically that is not the case. those are rare occasions. what i found out in 1998. this is something we just found out, that she has a

history of blood clots in the right knee. other dvt in the past. past history, dehydration, not moving around. has over a million miles in planes. these travels, you see when you travel from here to california you can't put your shoes on. that is because the blood has to somehow get back to the heart. moving around and putting compression stockings is way to prevent these blood clots. she travel as lot. probably under a lot of stress, dehydrated, all of that resulted in this blood clot. we should wait until we get more information about the exact location of this blood clot. heather: what will the recovery be like? >> they're monitoring her blood very carefully. when you give the anti-coagulation, you want to make sure you get it into perfect zone of being blood thinning enough to resolve the blood clots. anymore than that you can cause bleeding especially with history of concussion. that would be very risky. they're monitoring her very closely to make sure we get a perfect zone for thinning her blood and she will be

able to go back out and with close monitoring to make sure the clots are dissolved and she will be healthy again. heather: thank you very much for filling in the blanks until we get decision information as you said. >> we'll keep you posted. heather: thank you very much. gregg. >> happy new year. gregg: we're getting reports that dangerous mexican drug cartels are now directly connected with crime syndicates right here in the united states. a look at the dangerous links straight ahead. heather: and as we get reports on some possible progress in the fight to avoid the fiscal cliff we will look how much this is really being made and whether it's enough to keep us from going over the edge at midnight tonight. >> the debris at the bottom of the fiscal cliff will be the wrecked hopes of doctors of medicare patients, unemployment employed workers who can't protect their families, middle class taxpayers who can't pay anymore. our nation's pose at the fiscal cliff is necessity of

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heather: you're looking at a live shot here of the bagpipes playing for the funeral of firefighter tomascz kaczowka. the funeral services underway for the 19-year-old volunteer firefighter. he was shot and killed while responding to a christmas eve fire that turned out to be an ambush. he along with 43-year-old michael chiapperini joined the fire department both as teenagers. they helped many new firefighters get their start. both funeral services for both men, both heroes, are underway today.

gregg: mexico's violent drug cartels strengthening their hold on the drug trade north of the border. working directly with california's street and prison gangs, eliminating the need for the middleman and that is making the job of catching them even more dangerous for local law enforcement. adam housley is following this story live in los angeles. adam? >> reporter: gregg, a local and federal law enforcement have been warning about this trend for number of years about how the violence spills across the border and connections would spill across the border. that apparently has happened because a number of law enforcement agencies say the middleman is now gone. cartels are working with gangs directly and that has everybody concerned. from extortion screams to vicious violent crimes to working with southern california street gangs, are mexican cartels strengthening their grip in california. >> i would say yes. and what concerns me is the political shift in mexico. the shift might make it even stronger in california.

>> reporter: a political effort to decrease violence south of the border. that means the mexican government might not crack down and fight the cartels like they have in recent years. this concerns ventura county, assistant sheriff dwarry peties who has seen the cartels become more brazen. >> the cartels are in los angeles. they're recruiting from banks in compton, southwest to do their work. it is about the money i have never seen these street gangs ever have a position of authority. they're like labor. ruthless labor report krort cartels have been working in for years. in an effort to make more money and avoid prosecution and strengthen they have eliminated the middleman and work directly with california street and prison dpangs. they're also going out of their way literally to extend authority over california drug trafficking by shipping drugs on boats several hundred miles north of the border. >> where we're at a challenge, they have a unconstrained budget.

they're moving to more sophisticated means of smuggling. particularly low profile vessels we call semisubmersible self-propelled vessels. even with the potential of them developing fully submersible, submarines, if you will to move their commodity which again is worth billions of dollars. >> reporter: billions of dollars. it is fueling violence in counties like ventura, riverside and not just here in california, gregg, it is starting to spread across the southwest. back to you. gregg: adam housley live in los angeles. adam, thanks. heather: lawmakers on the house floor continue to step up to the mike and talk about the budget battles but nothing can be done until the senate meet as at 11:00 a.m., eastern. we're tracking the final moments and possible progress on the hill. gregg: the parents of a young survivor in the tragic newtown shooting are suing for $100 million but their attorney says this is not about the money. it's about preventing similar tragedies from ever happening in the future.

>> i'm saying for a fact that the state didn't do enough to provide for their safety. the state of connecticut and other states too are failing to protect the children from guns.

gregg: major headlines in the fight over the fiscal cliff as the number two republican in the senate moments ago said there could potentially be a bill ready for the floor, but after lawmakers turned down several different plans to avoid

potential tax hikes for every american what do we know about this possible bill? not much, and may be more importantly if it passes, what does it mean for your wallet on january 1st, that is if we fall off the cliff. matt mccall is president of penn financial group llc. the irs is today notifying employers on how much they will have to withhold from their employees' checks. let's go through each and every one of these tax increases if there is no deal, and we dive off the cliff. let's begin with the first one. marginal income tax rates ric rice for nearly everybody in america. >> over 90% of americans will be hit with higher taxes, and everybody talks about the wealthy getting hit the hardest. what i find fascinating is two-thirds of americans that make less than $20,000 a year will get hit with higher tax rates which will equal a gain of close to $600 more per year in taxes. if you're making let's say $18,000 you could get hit with

$600 more in taxes. it doesn't sound like a lot to a lot of people but that takes a huge chunk out of putting food on the table and getting clothes for your children. it's a big deal. gregg: estate taxes will rice from 35% on 5 million or more to 55% on 1 million or more. >> you know this really affects a lot of people in the middle of america who have farms. if you have a farm a lot of times you don't have liquid assets, it may be worth more than a million dollars, someone passes away. you have to come up with hugest state tax you have to sell your farm that may have been in your family for years. this is a huge difference that we're seeing that could change. gregg: capital gains taxes will rice from 15% to 20%, but look at the dividends that will be taxed now at ordinary income which will more than double the rate. >> exactly. there are so many baby boomers and senior citizens out there that rely on dividend payments that come in every month as income to live off of.

if they are getting taxed twice as much, what happens? they are spending less, that affects the economy. dividends got hit at the end of the year in the stock market due to the potential falling off the fiscal cliff. gregg: 30 million americans will be affected by the alternative minimum tax and they will have to pay a much higher tax rate. >> a lot of people don't even know that they will be one of that 28 to 3,030,000,000 people getting hit. this all comes at the end of the year when you realize how much more money you you'll pay in taxes coming out of your paychecks this affects almost every american. gregg: social security the payroll tax that everybody has been talking about, that is suddenly going to jump from 4.2% to 6.2%, the average wage easterner pays about $700 more? if you make less than $50,000, right around $50,000 you're paying about $650 more. again this is affecting middle class america. a lot of people in the middle class say this isn't going to affect me, this is just about rich people. you're seeing more and more everything we talk about hitting

the middle class the hardest. gregg: every potential deal we are hearing today none of it affects the payroll tax, that will go up automatically on everybody no matter what. >> that is almost guaranteed. gregg: caps on personal exemptions and itemized deductions will be suddenly reinstated overnight. >> when you file your taxes at the end of the year what happens tkpwaeurpbgs th again, the childcare tarbgs th tax, the lower income tax. it's hitting the single mothers, not the quote unquote the rich. it affects all of us. gregg: obamacare taxes will begin for individuals earning more than 200,000 and couples morning here than $250,000. >> most people think this doesn't affect me. this could trickle down, a lot of people in this bracket are the ones who have small businesses. so if they are getting hit more with higher taxes i'll see possibly layoffs of one or two people, multiply that by tens of thousands small businesses

you'll see the consumer spend less. gregg: congress can handle it individually because the president signed an executive order giving them all pay raises. >> it's true. gregg: unbelievable. heather. heather: coming up president obama facing another key test as he approaches the start of his second term. the ongoing battle now turning to america's ports, as a strike deadline fast approaches. doug mcelway live from washington. doug, the complaints of longshoreman whose strike was temporarily averted last week is kind of a symbol of what is threatening unions all across the nation, right? >> it really is heather, the longshoreman have been threatened by automation. it takes one longshoreman to do a job in the early 1960s it took three men to do. as automation has increased the longshoreman's union demanded their job security be plea served. the shipping industry worked out a deal where longshoreman would be paid a fee based on the weight of every container this a ship carries. but the industry finds it

prohibitive lee expensive. >> antiquated work rules we've seen in it automotive industry, in the steel industry where efficient will see and new productive machines can come into play and people get displaced by that. it's been a difficult thing but it's one of the things that in order to maintain the cost and competitiveness in a global marketplace we have to pay attention to. >> reporter: president obama is basically caught in a web of his own making. he wants to be competitive in the global marketplace buy also owes his victory in part to unions, and by extense to some of the antiquated work rules that they support. >> you only have to look to michigan where workers were instrumental in reviving the auto industry to see how unions have helped build not just a stronger middle class, but a strong america. [. [cheers and applause] ] >> those remarks delivered on december 10th in michigan at the damler detroit diesel plant

before michigan voted to make that state the birthplace of manufacturing unions a right-to-work state. heather: unions expect something in return for all their financial and voter support ever the president, correct? >> reporter: they sure do. but with a divided congress there is little the president can accomplish legislate late i havlegislative lee. that's why he turned to recess employees to return the favors to big labor. heather. heather: doug mcelway live for us in washington, thank you, doug. gregg: venezuela's president hugo chavez is suffering new complications from cancer surgery according to his vice president who describes his condition as delicate. steve harrigan has the latest live from miami. steve. >> reporter: gregg, hugo chavez has a respiratory infection, this after his fourth cancer

surgery for an unnamed kind of cancer inside of cuba. chavez has been very slow to recover. this time around he hasn't been seen in public or heard from in the past three weeks and the condition serious enough for his vice president, nicholas mo tkurbgs rduro to travel with him. he is his hand-picked successor. there is speculation whether he'll be able to attend his inauguration. they hint the inauguration could be delayed or postponed if he is not physically able to make that. the real key is the venezuelan constitution. if chavez does die before that inauguration on january 10th venezuelan officials will be forced to call a new election within 30-days time, gregg. gregg: steve harrigan live in miami, thank you. heather: with just hours remaining until the fiscal cliff deadline, at this point what would it take to get both parties to approve a deal in time?

our next guest is cautiously optimistic that senator mcconnell and vice president biden and their talks have maybe made some progress on the budget talks. californian congressman buck mckey oma mceon joins us live from capitol hill. pwhra*p

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gregg: first responders in missouri braving freezing cold water to rescue a woman and three young children. the driver hit a patch of ice and her suv skidded into a river

in south st. louis, the vehicle overturning in the water, but the rescuers managed to get all four out through a broken window despite the dangerous road conditions. they say the driver actually deserves some of the credit for saving the kids' lives. >> there was some ice down here on the road, apparently she hit a patch of ice, went down the hill. >> i can only imagine what she thought with the three kids in the back seat who were all properly seatbelted in. the infant was in the car seat. that saved her life as far as i'm concerned. gregg: all three children were under the age of five. firefighters salted the icy road to try to prevent any more accidents like that. heather: as the u.s. heads closer to the edge of the so-called fiscal cliff one of the big consequences of going over is a series of major spending cuts that would take a direct toll on america's armed forces. while lawmakers of all stripes have seen this debate playing

out firsthand our next guest knows all too well the affects those cuts would have on the men and women who keep americans safe. bucky shinmoedake chairman of the house armed services committee. thank you for joining us. >> thanks for having me. >> to do the math the 500 billion reduction in military spending triggered by 2011's budget control act would be added to the 487 billion the obama administration larry limb natured in this year's budget q. can our military survive that? >> we had five hearings leading up to this. and all of the former and current military leaders said how devastating it would be from the secretary of defense on down. secretary of defense said that it would be like shooting ourselves in the head. you know there hasn't been much talk, with all of the talk about the fiscal cliff that seems to be soaking up all the oxygen in the room. i noticed that the al-qaida and

the a rabe bow and pennsylvania have put a bounty on the head of the ambassador, and on any military person from the u.s. that's killed. with what happened in benghazi the ambassador and three other americans killed, and we have done nothing to -- other than investigate -- to take any objection on that, now we have this other ambassador, and military men that are under threat of their lives, we have hot spots all around the world. we still have over 60,000 troops in afghanistan that are going outside the wire every day putting their lives on the line, and yet we are talking about cutting a trillion dollars out of defense. heather: right, really not even talking about, it's not even being discussed right now. all we are talking about are the tax rates, that's all i'm hearing about. what are you hearing there on capitol hill right now? are you hopeful that some sort

of compromise will come out today, or in time to make a difference? >> well, i'm always hopeful, but i think the commander-in-chief, the president, the only person that is elected by everybody in this country has really neglected his main job, which is commander-in-chief, to leave these troops and to leave people around the world open to these threats, and to be cutting them back at this amount is incredulous to me. i just -- i can't understand it. heather: what do you see is the sticking point right now between democrats and republicans, in terms of what is on the table and why we can't come to an agreement? >> well the basic difference is they want more revenue, we want spending cuts. you know, if we cut all of the domestic spending that we vote on every year, if we totally eliminate it, eliminate all the defense department, eliminate all federal spending at all levels, except for the mandatory, we would still be

running a deficit of a half trillion dollars a year. and to not focus on the real problem is just -- it's baffling to me. what we really need to do is make some real cuts in the mandatory, automatic pilot spending that we are caught up in. heather: can i ask you a question? this is something that came out last night and it was reported to be a sticking point. the g.o.p. seeking some changes in how the cost of living increases are calculated, concerning social security benefits. they did end uptaking that off the table, but why was that aide, why was that in there? what type of a bargaining chip was that being used for, can you tell us? >> well, i think that was probably an attempt on the senate side to address the mandatory spending. if we don't at some point face up to the costs of social security and medicare and some

of these other expenses that are just automatically increasing year by year, we're going to bankrupt ourselves. social security will be gone, medicare will be gone. we get reports from the auditors every year telling us how much longer they are going to last and they are not going to be around much longer. and i think that if we don't do something to strengthen and preserve social security and medicare we are going to not only lose them, we will lose the domestic spending also. heather: all right. we will see what happens just hours from now. thank you so much for joining us on this busy day, we appreciate it. congressman mckeon thank you. >> thank you, heather. gregg: our legal panel is here to debate this $100 million lawsuit already being filed in newtown, connecticut, and what kind of changes the plaintiffs are hoping to achieve coming up next. [ fishing rod casting line, marching band playing ]

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gregg: a $100 million lawsuit is being filed by the parents of a young girl who survived the tragic school shooting in newtown, connecticut, and while that girl may have lived through that harrowing ordeal her family attorney says it wasn't without an immense amount of suffering, mental and emotional anguish. but the lawyer claims this lawsuit isn't really about the money itself, it's about making sure that a crime of this nature is never allowed to happen again. >> the whole thing came in overt intercom, down to the screaming and the cursing, and the bang, bang, bang, and her friends are dead, and that's trauma. >> don't you think hearing that saved her life potentially? >> i think that's -- that's a leap of logic that i could never even imagine. what you do is you can arm the

principal and the school teachers with mace and pepper spray, high grade, that can go 30 feet. the principal just presses a button, oil goes on the floor and he can't even walk. my job is to get the message out that we have to stop it and work hard. gregg: all right. that is the plaintiff's attorney. joey jackson a former prosecutor, criminal defense attorney. arthur eye della has the same pedigree. >> sounds like we are dogs new don't want me to go there. civil lawsuits for money damage is yes about compensating alleged victims, but it's also about something else isn't it art stphur. you are? >> it affects a change especially when it's against the government. investigators look and say, what happened here why did our government have to payout x amount of dollars. in new york there was a big ferry that crashed, the staten island perry and people were killed and injured. procedures were changed, it a

effectuates change and i'm glad that that's what the plaintiff's attorney, he did put that in there. this isn't just a money grab, although i'm not going to deny that that young person, young child is probably traumatized for the rest of her life, and some of that money will be used for treatment, but hopefully this is a push, the president of the united states spoke about it yesterday, in gun control and things like that, this is just another afternoon of changing things due to the acts of this one animal. gregg: joey jackson, negligence cases invariably come down to foreseeability, don't they. >> they do, gregg, they really do. ultimately and you've heard me say this before the risk preserved is the duty defined. what does that mean? it means if you could reasonably expect and anticipate what occurred then you're in good standing with regard to filing the suit. if you can't anticipate or foresee that it would happen then it's problematic. i think here the hurdle is that, listen, these are six and seven-year-old children, this is horrific behavior, it's unprecedent, and as a result of that it would be a stretch to

claim that we could foresee that this would occur. gregg: one could argue that after columbine it suddenly became foreseeable that gunmen could kill children inside schools. >> and i agree with that, and i think the security would be much on stronger if this guy just walked into the school. but my understanding is the doors were locked, there was an intercom system. the general public did not have access to the school. he shot out the glass and walked through. gregg: you heard the lawyer he said she should have taken additional measure. >> every principal should have pepper spray that shoots 30 feet and put oil on the floor. >> i don't think that would have mattered. ultimately this gunman had an agenda, he was going to do what he was going 0 to do. it's tragic and unfortunate. i don't think pepper spray would this prevented it. this is a lawsuit on behalf of a surviving person. gregg: you'll have wrongful death lawsuits here. for the victims.

>> i'm surprised it took so long to be honest with you. gregg: here is the problem, governments generally have immunity, although many states hav have adopt adopted and connecticut is one of them the so-called tort claims act. but you've got to jump through a lot of hurdles. >> i believe that's where this lawsuit is right now. it's not like a typical lawsuit, citizen a versus citizen b, what he's done this attorney is he's filed the paperwork in front of the commissioner and said listen i would like to bring this lawsuit, i need your permission to bring this lawsuit against the state of connecticut and the commissioner has to decide yes you can or no the state is immune. gregg: the plaintiff's burden is a high one. they have to prove that school and state officials did something other than their ordinary and discretionary decisions. >> exactly, gregg and i don't know on the facts here how you overcome that or how that is established by anyway or form. it's a tough one, greg. six and seven years old. who would think. schools are our sanctuary. we all here get to work every

day because we are comfortable knowing our children are being educated. we wouldn't think in a million years something like there would happen, that is the problem. gregg: state legislators might undertake a compensation fund and have people opt in. >> that may work like 9/11. gregg: and they should. arthur aidala, joey jackson, good to see you. >> happy new year. heather: the senate about to meet in minutes. they are saying there are signs are progress. we are tracking all the developments from the hill as they are happening this morning. >> the problem is spending money. mr. speaker the american people know this. why doesn't the federal government and congress understand it? why? because park ton is obsessed with spending someone else's money, it's the arrogance of power that congress spend the people's' money without regard to how this obsession affects those very people.

heather: welcome back. we are hours away from new year's eve. make sure you ring it in with us. megyn kelly and hem and bill hemmer will be hosting all american new year's eve right here on the news channel. this time we have this four-time grammy winner. ♪ [singing] heather: that's right, pat benetar will be performing her biggest hits including the one you just heard